This FTSE 250 share is up 17% today. Here’s what I’d do about it now

This FTSE 250 share is up on a robust update, but can it continue to rise over time?

The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

When investing, your capital is at risk. The value of your investments can go down as well as up and you may get back less than you put in.

Read More

The content of this article is provided for information purposes only and is not intended to be, nor does it constitute, any form of personal advice. Investments in a currency other than sterling are exposed to currency exchange risk. Currency exchange rates are constantly changing, which may affect the value of the investment in sterling terms. You could lose money in sterling even if the stock price rises in the currency of origin. Stocks listed on overseas exchanges may be subject to additional dealing and exchange rate charges, and may have other tax implications, and may not provide the same, or any, regulatory protection as in the UK.

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More.

The FTSE 250-listed insurance provider Just Group (LSE: JUST) saw its share price sky-rocket after releasing its business update today. With a 17% price increase as I write, the Just Group share price is finally back to the pre-crisis levels of around a year ago. 

This is encouraging for a share that saw quite the fall last year. It lost over half its value from the highs seen in February 2020. But I think the important question now is whether JUST can maintain these share price levels and rise from here on. 

I believe there are arguments both in its favour and against it. 

What favours Just Group

Just Group’s latest performance is clearly something that goes in its favour. Its sales are up 12% and it’s fortifying itself against risks by reducing its exposure to the UK’s property market, as well. 

JUST’s also optimistic about 2021. According to the CEO, David Richardson, “We have a strong pipeline of new business and we start the year with increased confidence”.

In the short term, as the bull market continues, I reckon that investors will continue to chase stocks that look promising. JUST is clearly one of them, given its latest results. This bodes well for its share price. 

Over the longer term, the company’s focus segment of retirement solutions is likely to benefit it too. 

The percentage of the ageing population in the UK has been rising over the past decades according to the Office of National Statistics (ONS). As per the NHS, as life expectancy increases, this trend is only expected to speed up

Risks to the FTSE 250 stock

The one big reason I’m hesitant to buy the JUST share, despite all the positives, is its financial record. In the last five years, it has been loss-making in two. Its revenues have also been inconsistent. 

Unsurprisingly, the FTSE 250 stock’s price trends haven’t exactly been encouraging either. Over the last five years, its share price has clearly been trending downwards. For long-term investors in particular, this is a big red flag, in my view. 

It doesn’t pay dividends either, a feature that could make up for (some) share price weakness for me as an investor. It could start paying them again, but their continuity will depend on its financial performance, which hasn’t always been strong.  

The upshot

I think it’s possible that JUST’s share price will continue to rise for some time because of both its own performance and investor optimism, but I’m still cautious. At the very least, I’d wait till early March, when it releases its full results for 2020 before making a decision. 

In the meantime, I think there are more predictable stocks to buy, which can also return good capital gains over time. 

Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be assessed. Consider taking independent financial advice.

Manika Premsingh has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

More on Investing Articles

Investing Articles

Could the JD Sports Fashion share price double in the next five years?

The JD Sports Fashion share price has nearly halved in the past five years. Our writer thinks a proven business…

Read more »

Bus waiting in front of the London Stock Exchange on a sunny day.
Investing Articles

If interest rate cuts are coming, I think these UK growth stocks could soar!

Falling interest could be great news for UK growth stocks, especially those that have been under the cosh recently. Paul…

Read more »

Investing Articles

Are these the best stocks to buy on the FTSE right now?

With the UK stock market on the way to hitting new highs, this Fool is considering which are the best…

Read more »

Petrochemical engineer working at night with digital tablet inside oil and gas refinery plant
Investing Articles

Can the Centrica dividend keep on growing?

Christopher Ruane considers some positive factors that might see continued growth in the Centrica dividend -- as well as some…

Read more »

Smiling family of four enjoying breakfast at sunrise while camping
Investing Articles

How I’d turn my £12,000 of savings into passive income of £1,275 a month

This Fool is considering a strategy that he believes can help him achieve a stable passive income stream with a…

Read more »

Person holding magnifying glass over important document, reading the small print
Investing Articles

2 top FTSE 250 investment trusts trading at attractive discounts!

This pair of discounted FTSE 250 trusts appear to be on sale right now. Here's why I'd scoop up their…

Read more »

Smiling young man sitting in cafe and checking messages, with his laptop in front of him.
Investing Articles

3 things that could push the Lloyds share price to 60p and beyond

The Lloyds share price has broken through 50p. Next step 60p? And then what? Here are some thoughts on what…

Read more »

Young female business analyst looking at a graph chart while working from home
Investing Articles

£1,000 in Rolls-Royce shares a year ago would be worth this much now

Rolls-Royce shares have posted one of the best stock market gains of the past 12 months. But what might the…

Read more »